And The Next European ETF Domino Is...Belgium

At least that's the way things are looking for the iShares MSCI Belgium Investable Market Index Fund (NYSE: EWK). Today really was Black Friday for Belgium's credit rating as Standard & Poor's pared its rating on Belgium one level to AA. That's still a rating that's solidly investment grade, but S&P warned of further cuts. The ratings agency said “renewed funding and market risk pressure” were among the catalysts behind the downgrade. S&P also noted Belgium's financial services firms could very well need more sovereign support. That's not good news for an ETF that allocates almost 24% of its sector weight to financials. We've lamented the vulnerability of the iShares MSCI Belgium Investable Market Index Fund several times in recent months and that prophesy appears has been coming true for a while now.The ETF has shed about a third of its value since its May peak and its chart shows a nasty series of lower highs and lower lows. In November, EWK has managed to violate support at $11 and the ETF is now trading in an area that is hasn't seen since May 2009.Things aren't going to get better in the near-term for Belgium and EWK, either. Exports account for 80% of the country's GDP. Yields on 10-year Belgian sovereigns have surged nearly 50% in just six weeks. Oh yeah, it has been over 500 days since Belgium first started trying to form a new government. Many attempts later and the outcome is still in doubt.EWK's situation is far less murky. If psychological support at $10 is violated and the Euro Zone crisis continues and it looks like it will, we're talking about an ETF that could easily see the $7-$8 area sooner rather than later.Bull case:Extremely hard to forecast right now. EWK needs a Santa Claus rally of epic proportions and a quick resolution to the sovereign debt crisis to draw buyers in. Are you willing to bet on that happening?Bear case:EWK is living its bear case right now. The unfortunate reality is that while it may appear as though things can't get any worse for the ETF, they easily can get worse and do so rather quickly.